Growing enthusiasm for cloud-based accounting

Charles Wright

One of the reasons we believe our restaurant and coffee shop bills ought to be tax deductible is because we don't go to these places for the refreshments. Our visits are intelligence-gathering missions.

The most recent example of the sort of information that can be extracted from these outings occurred when one of the friendly restaurateurs began enthusing about his accounting package.

Small-business accounting packages have been much in the news, with the decision by the US-based Intuit to end the deal under which Sydney-based Reckon Software has been the exclusive distributor and development partner for its popular QuickBooks software.

The new arrangements don't begin until next year but in the interim both sides have been engaged in a phoney war, culminating in last month's announcement by Reckon that it would not be marketing QuickBooks 2013 under that name, but instead would release it as Reckon Accounts.

The somewhat obvious intention is to at least partially erase the QuickBooks brand name from the consciousness of the thousands of small-business owners, accountants and bookkeepers who have been using the product for many years.

The move would allow Reckon to build awareness of its brand ahead of what will be a three-way battle for desktop accounting market share between QuickBooks, the Reckon product and MYOB.

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Our restaurateur friend wasn't talking about any of them, however. The product that has captured his heart is Saasu, a cloud-based accountancy package developed in Sydney by former investment banker Marc Lehmann and IT expert Grant Young.

A week or so later, in a Sydney coffee shop, we overheard someone raving about a similar cloud-based package called Xero, which was developed in Wellington, New Zealand, by Rod Drury and Hamish Edwards, with Craig Winkler, who founded MYOB, as a key investor.

The growing enthusiasm for these cloud-based accounting packages is indicated by developments in the 12 months to the end of March this year, in which Xero tripled its Australian customer base to 51,000. Last week the company announced it would about double its workforce and establish a new support centre in Denver, Colorado.

Reckon, MYOB and Intuit are all trying to build market share in the online accounting world, with Reckon One launched this month, MYOB AccountRight Live and QuickBooks Online.

The experience of John Anderton, chief executive of web design company Butterfly, which has offices in Sydney and Melbourne and a bookkeeper in Ballarat, suggests they will find it difficult to compete against Saasu and Xero, and that the two cloud-based services will take an increasing share of the desktop software business.

The most compelling attraction is cost. When Anderton made the switch a little more than two years ago the business had three QuickBook licences. Today there are 10 people accessing Saasu, and costs are down by about half.

He says Saasu and Xero - which he has also used in another of his companies - are much more reliable and generally more appropriate for the way business is increasingly being done online.

''The benefits of cloud-based services are light years ahead of having physical infrastructure,'' he says. ''We have transitioned most of our software to cloud-based applications … and there is no way I would go back.''

One distinct benefit is security. ''One of my biggest worries used to be coming to work and finding that somebody had stolen our server,'' he says. ''I don't worry about that any more, and I also don't worry about doing back-ups, because that's part of the service.''

There were some downsides to the switch. He says Saasu does not generate the same range of custom reports as QuickBooks and it's difficult to switch between cash and accrual accounts, forcing the company to restructure some of its staff payment arrangements.

He has also found Saasu's system of having customers vote on feature requests means many of the improvements are not as helpful as he would like.